Hyde v. Hyde

• Decision Date: 08 December 1959
• Docket Number: No. 9721,9721
• Citation: 99 N.W.2d 788,78 S.D. 176
• Parties: Amanda P. HYDE, as Executrix of the Estate of Frank Hyde, Deceased, Plaintiff and Respondent, v. Hadleigh D. HYDE, Defendant and Appellant.
• Court: South Dakota Supreme Court

Page 788

99 N.W.2d 788

78 S.D. 176

Amanda P. HYDE, as Executrix of the Estate of Frank Hyde Deceased, Plaintiff and Respondent, v. Hadleigh D. HYDE, Defendant and Appellant.

No. 9721.

Supreme Court of South Dakota.

Dec. 8, 1959.

Woods, Fuller, Shultz & Smith, Sioux Falls, for defendant-appellant.

Lacey & Parliman, Sioux Falls, for plaintiff-respondent.

ROBERTS, Judge.

This is an appeal from the judgment entered on the verdict of the jury in an action for recovery of damages for breach of contract.

The Frank Hyde Jewelry Company owned and operated a jewelry store in Sioux Falls. Its capital stock and that of the Frank Hyde Realty Company were owned by plaintiff Frank Hyde, his son Hadleigh, and daughter Esther. In January 1950, Hadleigh Hyde went to California where his sister lived and his father was vacationing for the purpose of negotiating for the purchase of their shares of stock. The brother and sister entered into a contract identified in the record as Exhibit 1, which provided in part as follows:

'This agreement, made and entered into at Sebastopol, California, this 12th day of January, 1950, by and between Hadleigh D. Hyde, hereinafter called the first party, and Esther Hyde Howell, hereinafter called the second party, witnesseth:

'That, whereas, the parties hereto are brother and sister, and the children of Frank Hyde (hereinafter called the father) and the stepchildren of Amanda P. Hyde (hereinafter called the stepmother), * * *

'Now, therefore, the first and second parties do hereby agree, each with the other, as follows:

'In the event the father shall transfer to first party all of his shares of corporate stock in the Frank Hyde Jewelry Company and in the Frank Hyde Realty Company, with the written consent of the stepmother, then second party agrees to thereupon sell to first party, and first party agrees to thereupon purchase, all of the shares of corporate stock of Frank Hyde Realty Company now owned by second party, for the total purchase price of Fifty Thousand Dollars ($50,000.00), * * *

'As additional consideration for said transfer of shares of stock by the father, and said sale of shares of stock by second party, the first party agrees to pay to the father for the remainder of his life the sum of Seven Hundred Dollars ($700.00), per month.

'In consideration of the transfer by the father of his said shares of corporate stock to first party, with the written consent of the stepmother, and the sale by second party to first party of her said shares of corporate stock, and the agreement of first party to pay therefor, the first and second parties do hereby agree, that commencing from the death of their father, and monthly thereafter, they will each pay to the stepmother the sum of One Hundred Dollars ($100.00) per month (a total of Two Hundred Dollars ($200.00) per month), until the remarriage of the stepmother, or until each of the first and second parties shall have paid to the stepmother the sum of Sixteen Thousand Five Hundred Dollars ($16,500.00) or a total of Thirty-three Thousand Dollars ($33,000.00) such payments to cease either upon remarriage of the stepmother, or when said total payment shall have been made. * * *'

The contracting parties went from Sebastopol where the above agreement was signed to Glendale, California, to negotiate with their father and stepmother. The father signed an agreement which is dated January 13, 1950, reciting that he had read the foregoing agreement entered into between his son and daughter and that in consideration thereof assigned and transferred all his right, title and interest in the shares of stock owned by him in the two corporations, but did not agree to transfer the residential property in Sioux Falls, and the terms in the agreement prepared for his signature so providing were deleted by pen and ink. The stepmother signed a separate agreement consenting to the stock transfer.

After returning to Sioux Falls and consulting with an accountant, Hadleigh Hyde had another agreement prepared, identified n the record as Exhibit 2. The agreement was mailed to the father in California with a letter of explanation written by Hadleigh Hyde. This contract signed by Frank Hyde on February 1, 1950, provided in part as follows:

'This agreement between Frank Hyde Jewelry Co., a Corporation, first party (herein called 'Jewelry Company'), Frank Hyde Realty Company, a corporation, second party (herein called 'Realty Company'), Frank Hyde, third party, and Hadleigh D. Hyde, fourth party, all of Sioux Falls, South Dakota, witnesseth: * * *

'Third party hereby agrees to sell and surrender his said 103 shares of stock in first party to first party for the amount of the book value thereof, to-wit $37,860.14, and third party hereby agrees to sell and surrender his said 40 shares of stock in second party to second party for the amount of the book value thereof, to-wit $5,469.52, said shares of stock to be forthwith cancelled and retired and payment therefor to be made in installments as hereinafter provided. * * *

'There shall be paid to the said Frank Hyde out of the purchase price of said stock as aforesaid the sum of $700.00 on the first day of each calendar month, commencing with February 1, 1950, and continuing so long as he, the said Frank Hyde, shall live.

'After the death of the said Frank Hyde, there shall be paid to Amanda Hyde, wife of the said Frank Hyde, if then living, the sum of $100.00 per month, commencing with the first day of the first calendar month after the death of the said Frank Hyde, and continuing until her death, or until her remarriage, or until she shall have been paid the full sum of $16,500, whichever shall be earlier.

'Any balance remaining after the death of the said Frank Hyde, and the completion of the payments that will be due to the said Amanda Hyde as above provided (or any balance remaining after the death of Frank Hyde in the event of Amanda Hyde's prior death) shall be paid to fourth party, the said Hadleigh D. Hyde, in consecutive monthly installments of $500.00 per month, commencing with the first day of the first month following termination of the prior payments provided above; the final payment to be the balance remaining after the last full installment payment. * * *

'Fourth party, Hadleigh D. Hyde, hereby personally guarantees the performance of each and every covenant and agreement hereof on the part of first and second parties to be performed in favor of the said Frank Hyde and Amanda Hyde.'

The action herein was instituted on November 22, 1957, to recover payments under the agreement described as Exhibit 1. The complaint alleges that there were accrued installments in the amount of $26,400 due and owing to the plaintiff at the time of the commencement of the action. Defendant Hadleigh Hyde answered and as an affirmative defense alleged that the second contract superseded the former and that all sums due and owing had been fully paid. The jury returned a verdict in favor of the plaintiff in the sum of $19,535.65 and judgment was entered accordingly. Plaintiff died shortly after the trial, and his executrix is respondent on this appeal. Reference to the parties unless otherwise indicated will be made as they appeared in the trial court before substitution.

Plaintiff had been paid the price of the stock agreed upon in the second contract. The theory upon which this action was based was that payments under the terms of the first contract were to continue during the lifetime of the plaintiff and that the obligation to make such payments was not extinguished by the second contract. An issue in the action is whether or not by the transactions in question novation by substitution resulted. SDC 47.0238 provides: 'Novation is made: (1) By the substitution of a new obligation between the same parties, with intent to extinguish the old obligation; (2) By the substitution of a new debtor in place of the old one, with intent to release the latter; or (3) By the substitution of a new creditor in place of the old one, with intent to transfer the rights of the latter to the former.' Novation is not effective unless there is an intention on the part of the parties to extinguish the old obligation by substituting the new one therefor. Klinkoosten v. Mundt, 36 S.D. 595, 156 N.W. 85, L.R.A.1918B, 111. As stated in 39 Am.Jur., Novation, Sec. 21: 'In order to effect a novation there must be a clear and definite intention of the part of all concerned that such is the purpose of the agreement, for it is a well-settled principle that novation is never to be presumed. The intention of the obligor that the existing debt should be discharged by the new obligation must be concurred in by both debtor and creditor. The point in every case, then, is, did the parties intend by their arrangement to extinguish the old debt or obligation and rely entirely on the new, or did they intend to keep the old alive and merely accept the new as further security, and this question of intention must be decided from all the circumstances. The existence of such an intention may, of course, be found, even though there is nothing positive in the agreement. In other words, the intention to substitute one contract for another so as to constitute a novation need not be expressed, but may be inferred from the circumstances. The issue of novation presents questions of fact if there is any supporting evidence and the terms of...